Is It Better to Gift or Sell a Car?
At some point in your life, you may have thought of giving your car as a gift or sell it for a possible profit. You may be feeling generous to give it to a family member, a spouse, or a friend. On the contrary, you might also be thinking about selling it in exchange for a new one, or you just simply want to have some financial gain. You may have different kinds of reasons. Whatever purpose it may serve, we have listed some things that you may need to know before gifting or selling your car.
Gifting a Car
You might have a son or a daughter that is responsible enough to drive, can afford maintenance costs, and willing to take good care of your car. You may also want to make someone feel special or express your love by gifting them a car. Or give it to a friend who requires a vehicle and has a medical condition, that may help them in their daily tasks. Letting them have your car as a gift is an honorable thing to do. Favorably, the process of giving your car is pretty much straightforward and easy to accomplish. Here are some things you might consider when gifting a vehicle to your friends or loved ones.
MAKE SURE YOU OWN THE CAR. Of course, we know that you own the vehicle. Even so, you need to make sure that your ownership is certified. It is your responsibility to pay off any loans as you would not want to pass them to your loved ones or your friend. If you are still under obligation to pay off the vehicle, you will need to settle it with your financial institution. The financial institution will send you the title once you completed the payment so you can transfer it to your recipient along with the vehicle.
CONSIDER YOUR RECIPIENT'S FINANCIAL CAPABILITY. It's good that you have already settled your loan and that you already have the title. It is time you give a thought to your giftee's ability to maintain the car, such as keeping the tires in shape, changing oils, regular check-ups, car wash, and a whole lot more. Also, consider if your recipient can squeeze in car insurance on their budget. This 2020, the average car insurance costs $119 per month for an average car driver in his 40s with a clean record and good credit. The cost of the insurance depends on the driver's age, has a clean slate, good credit, and the state they live in as per Nerdwallet. You cannot gift a car to someone that's not accountable enough to do those things as owning a car comes with great responsibility. You may also want to choose a giftee that is somehow a responsible driver. We want them to be safe and not be involved in any violations, offenses, etc.
HANDING OVER THE TITLE. Part of the gifting process is transferring the title to your giftee. Make sure you already have the title with you before gifting the car as it is required to be accomplished by both parties. If you do not have the title for some reason, you can request a copy from your state Division of Motor Vehicles. The transfer process depends on your current state law, so better consult, or do some research about transferring of title. Most states will require you to sign the seller's portion and include the odometer reading and your driver's license number. As for the recipient, they will need to sign the buyer's section and simply write "gift" on the selling price part. After you transfer the title, the receiver will need to obtain insurance. If all is complete, the recipient can go to their state DMV to file a registration.
IS THE GIFT TAX NECESSARY? Maybe you are wondering, is a car received as a gift taxable? According to the Internal Revenue Service (IRS), the gift tax is a tax on the transfer of property by one individual to another while receiving nothing, or less than full value, in return. The tax applies whether the donor intends the transfer to be a gift or not. The giver is generally in charge of paying the gift tax. So How much is a gift tax on a car? The amount of the gift tax depends on the fair market value of your car. Is there a way on how can you avoid gift tax? The answer is, you cannot avoid it since it is required by the government. However, if your vehicle's fair market value is less than $15,000, then you are free from the gift tax. Otherwise, if your car value exceeds the $15,000 mark, then you will need to file a gift tax return using IRS Form 709, titled United States Gift (and Generation-Skipping Transfer) Tax Return. The gift tax ranges from 18% to 40%. There can be special rules, and exceptions for this under unique circumstances, we suggest to read about Form 709 to know more.
Selling a Car
There are many ways to sell a car. You can sell it to a private party, sell it to a car dealer, or a car buyer. This topic appeared in one of our past blogs about How Do I Sell a Used Car in Illinois? Selling a car may take a lot of time and effort, especially if selling it to a private buyer. Then again, it may ease up the work and schedule if you will sell to a car dealer or sell online to a car buyer. Let’s have a glance at the things you need to know before selling your vehicle.
Selling to a Private Buyer. If you wish to make a profit out of your vehicle, you can sell it to a private party. There are a few things you need to work on to do this. First, you will need to prepare your car. Repaint, repair any damages and have it cleaned. It will increase your vehicle's market value. Then you will have to gather information about it, such as its make and model, odometer reading, VIN (Vehicle Identification Number), mileage, car history, title, and registration. You also need to decide on its price by looking into Kelley Blue Book, Autotrader, or Edmunds for reference. You may now have all the necessary information about your vehicle, which means you can now sell your car! One way to sell to a private buyer is to post ads on newspapers, or the fastest way would be posting it online. You may post ads on Craiglist, eBay Motors, Cars.com, CarGurus, and Autotrader. If there will be a potential buyer, you can discuss the details with them and schedule a meet up for a test drive. Remember to have someone accompany you for test drives and do not let the buyer drive the car alone. Once both parties agreed on the pricing and the buyer willing to take the vehicle, it's time to process the paperwork. Please refer to your state DMV for the process as each state have their own laws with regards to the transfer of title. Please also check the state policy about what to do with your plates after you sell your car.
Selling or Trading In with a Car Dealer. If you choose to go an easy route, you can sell or trade-in your car with a car dealer. Compared to selling your vehicle to a private party, the experience can be more of a less-hassle. You can sell your car and get a new one by trading it in. Usually, you will bring your vehicle to a car dealer’s office, and they will have it inspected and appraised. It can be a smooth process since car dealers will help you with the paperwork. Though it may sound tempting, their offer may not be as good as selling the car to a private buyer. We advise you to check with other car dealers and compare their prices before you proceed in selling your vehicle.
Sell Car Online to a Car Buyer. One of the best places to sell your car is by taking the online route. Selling your car online is the most convenient of them all and typically saves your time and energy. One of the high paying car buyers in Chicago is Enrique of “Sell My Car In Chicago with Enrique for Cash.” They will help you in selling your car completely worry-free and hassle-free. You only have three easy steps: GET QUOTE. GET PAID. GET TOWED. All you need is to do is to get a free quote online or call (224) 236-7010 and tell them more information about your car. They will reach out to you and give you an offer. If you agree, they will have you scheduled for the car inspection. You do not have to go anywhere as Enrique will go to your preferred location. After inspecting your vehicle, they will let you sign the paperwork, and you will get paid instantly in cash. How convenient is that!
To Gift or To Sell?
We really cannot justify which one is better as every one of us has different needs. Depending on your wishes and needs, it is certainly up to you if you want to gift your car or turn it into a profit. If you need funds to afford a new one or just want to recover a portion of its market value, you can sell your car, preferably to a private party or a car buyer. Otherwise, if a family member, a friend, or spouse needs it, you can generously give your vehicle as a gift. You have all the right to do so as long as you are the certified owner. And besides, it always feels good to be kind and giving. You can be a blessing to others, and your act of kindness can have an impact on them or simply change their lives.
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